This Canal Project Aims to Elevate Cambodia’s Economy, But What Does it Mean for the Mekong?

This story by Hasya Nindita and Zhaoyin Feng originally appeared on Global Voices on November 14, 2025.

Around 10,000 people dressed in white polo shirts gathered near the Mekong River in Prek Takeo Village in Cambodia’s Kandal province on August 5, 2024. A huge stage with yellow and blue decorations floated above the water, with colorful balloons and Cambodia’s flag swaying here and there. At 9:09 am, the sound of bells, gongs, and drums echoed across Cambodia as Prime Minister Hun Manet took the stage and pressed a symbolic button.  

It was the groundbreaking ceremony for the construction of a new mega project called the Funan Techo Canal, which was attended by many high-profile guests from across the world. 

Cambodians were required to celebrate the groundbreaking ceremony with a one-day national holiday. The ceremony was broadcast by every state and private television station in the country and covered by journalists from national and international media alike.  

“The Funan Techo Canal will link the capital Phnom Penh to the deep water port in Preah Sihanouk province… facilitating the country’s trade exchange with the world,” said Hun Manet in his speech at the groundbreaking event.

The canal will span 180 kilometers, starting from the Mekong River’s Preak Takeo tributary in Kandal province, passing through Takeo and Kampot provinces to the coast in Kep province. It will connect Phnom Penh to the Gulf of Thailand and is projected to enhance Cambodia’s industrial, agricultural, logistics, and real estate sectors by directly connecting with international trade routes. 

But after the grand inauguration, the construction of the canal was halted for several months, reportedly due to “funding issues” with China. The Cambodian government denied the allegation, slamming the media reports as “misinformation.”

In April 2025, a deal was made between Cambodia and China Communications Construction Company (CCCC), the parent company of China Road and Bridge Corporation. Structured under a 51–49 ownership model of the Public Partnership Contract agreement, the budget was revised from an estimated USD 1.7 billion to USD 1.16 billion. 

During his remarks, Wang Tongzhou, Chairman of CCCC, emphasized that the Kingdom is an important strategic market in Southeast Asia.  

“More importantly, it marks a significant milestone in deepening cooperation between the two nations,” he said, as quoted by Khmer Times.

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Expected to finish in 2028, this project is not without its controversies. Aimed at boosting Cambodia’s economy, there have been some environmental and human rights concerns related to the project, especially for the Mekong Delta, a vital part of people’s livelihoods in other neighboring Southeast Asian countries. 

What is the Funan Techo Canal? 

Initially announced in 2021, the Funan Techo Canal is a major waterway infrastructure that would be 100 meters wide, 5,4 meters deep, and designed to accommodate vessels of up to 3,000 deadweight tons. Once completed, it will strengthen Cambodia’s position as a regional logistics hub and reduce its dependence on Vietnamese ports for trade access. 

This project reflects the country’s aspiration to become a major logistics hub in Southeast Asia. It is expected to reduce shipping costs by 70 percent and is projected to earn USD 88 million annually from transportation by 2050. The canal will be a shortcut to international trade that will stimulate more foreign investment and create jobs.  

The Cambodian government claimed that 1.6 million people living on both sides of the waterways will benefit from the project. Hailed as a “revolutionary engineering achievement,” this canal is expected to boost the agricultural sectors and enhance flood mitigation and water conservation efforts, especially in the dry season, according to Mey Kaylan, a senior adviser to the Supreme National Economic Council of Cambodia.

“It will open up a new horizon for the development of Cambodia,” said Mey to China Daily. 

During the inauguration ceremony, Hun Manet stated that the canal will be built “no matter what the cost” as it brought “national prestige” to the Cambodian people. Yen Samnang, a research fellow at the Phnom Penh-based Asian Vision Institute think tank, shared optimism that this canal will enhance regional connectivity and economic integration. 

 “The project is truly in line with Cambodia’s values of sustainability, innovation, and global cooperation,” he told the Khmer Times.   

Environmental and human rights concerns

While the Cambodian government has insisted the canal is environmentally sustainable, environmentalists are concerned about the future of the Mekong waterway. 

The Mekong River is a vital resource for millions who live on the banks of the river, from China to Myanmar, Thailand, Laos, Cambodia, and Vietnam. It is the world’s largest inland fishery, sustaining at least 40 million people and generating over USD 11 billion annually, according to the World Wildlife Fund. Mekong is also the world’s third most biodiverse river, with at least 1,148 fish species, and an important food zone for the world. 

Vietnam has raised concerns that the Funan Techo Canal would disrupt the ecosystem balance, especially in the Mekong Delta in southern Vietnam. The canal’s high embankments will prevent silt-laden floodwater from flowing downstream to Vietnam, which could cause drought in Vietnam’s agricultural “rice bowl” and Cambodia’s floodplains, according to Brian Eyler, director of the Washington-based Stimson Center’s Southeast Asia Program.  

For Vietnam, this could undermine its agricultural sector, which accounts for 12 percent of its economy. In 2024, Vietnam exported over 9 million tons of rice, generating a value of USD 5.7 billion. This number accounted for 15 percent of global exports, raising global food security concerns, SCMP reported. 

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Furthermore, Le Phat Quoi, head of Vietnam’s Institute for Environment and Natural Resources, told Mongabay that digging the canal will disrupt the region’s Holocene soil, “a potential acid sulfate soil” which will oxidize into “actual acid sulfate soil,” producing sulfuric acid. This process could corrode canal infrastructure and release dangerous concentrations of heavy metals into the floodplain, threatening both agriculture and aquatic ecosystems. 

However, Cambodian President Hun Sen debunked these concerns via a post on X, arguing that “this canal has no impact on the flow of the Mekong River, as it does not connect directly to the Mekong but rather to the Bassac River.” 

Locals would also be threatened by the construction of the canal, as many who live along the banks may lose their homes. Dim Mech, a businessman living along the planned canal route since before 2000, told CamboJA News that he has yet to receive any official notice regarding compensation or relocation, even though local authorities have already documented his land, home, and crops.

“I’m afraid to leave. I’ve worked so hard to build this life. If I lose it, I won’t survive,” he said to CamboJA News.   

Strengthening China-Cambodia relations

This canal has also raised questions about the future of Cambodia’s geopolitics. The Chinese ambassador to Cambodia, Wang Wenbin, said this project marks a “new stage” in China-Cambodia cooperation. 

Analysts believe that the Funan Techo Canal could help China to expand its economic and geopolitical influence in Cambodia and in the wider region, but China’s rising dominance would concern the US and Vietnam. 

“Regarding the controversy [with Cambodia] over the canal, environmental protection or other arguments are not substantial reasons,” Zhou Chao, a researcher at Anbound Consulting’s Beijing Research Center, told the South China Morning Post. “Fundamentally, it is the wariness and resistance of the US and Vietnam towards the continuous rise of China’s influence.”

Politically, China has invested heavily in Cambodia to expand its soft power and diplomatic influence. For Cambodia, China is the largest source of its foreign investment, providing an important boost to its infrastructure development and economic growth. While the canal project might increase the risk of government debt, in the short term, it helps to address Cambodia’s unemployment crisis, could boost its economic growth, and expand exports to China. By aligning with China economically, Cambodia also gains geopolitical protection in the region. 

However, this project could have a negative impact on the Cambodia-Vietnam relationship as it will reduce around 10 percent of international trade to and from Cambodia via Vietnamese ports. This could divert substantial trade from Vietnam to the Gulf of Thailand, strengthening China’s economic leverage over Vietnam. China and Vietnam have a fraught history and ongoing territorial disputes.  

While critics believe the canal represents a risk of Cambodia’s overreliance on China, Chinese media commentator Yuan Ye argued that, on the contrary, the Funan Techo Canal is an attempt for Cambodia to even the balance of power in the region. 

Yuan said to Guancha, a Chinese nationalistic media outlet: